On December 1, 2020, the New York Attorney General announced amendments to the New York Investment Advisory Act (the “Rules”) that will require investment adviser representatives (“IARs”) to register with the state of New York. If you render investment advice from a place of business in New York, now is the time to begin reviewing the rule and your registration obligations. This new law applies even if you previously filed a NY-IAQ on behalf of a state-registered investment adviser.

Beginning on February 1, 2021, many IARs of state-registered and SEC-registered investment advisers will be required to meet examination and registration requirements with the state of New York. Under the Rules, an IAR of a state-registered firm is defined as “a natural person representing an investment adviser or solicitor in doing any of the acts that define an investment adviser”. Those acts generally include engaging in investment advisory business within or from the state of New York. For individuals acting on behalf of SEC-registered firms from a place of business in New York, the Rules defer to the federal definition of “investment adviser representative”. Affected IARs will be required to register through the Central Registration Depository/Investment Adviser Registration Depository. The licensing fee is $200 and will be the second most expensive in the country behind Georgia.

The Rules contain an implementation period, which will allow those currently engaged in an advisory business to continue their business without an approved registration until December 2, 2021 as long as the U4 requesting the IAR’s registration in New York is submitted on or before August 31, 2021.

The Rules also provide for an examination waiver for financial professionals who have been serving as IARs for at least two years prior to February 1, 2021 so long as they are not disqualified. Disqualifying events include being subject to any regulatory or civil action, proceeding or arbitration, either pending or in the preceding ten (10) years from the date of application, that would require disclosure on Form U4, or that person has been notified or has reason to believe that they currently are or remain the subject of a regulatory or law enforcement investigation related to investment-related activities. IARs may also request an examination waiver if they currently hold a professional designation recognized by rule or order and in good standing (e.g., Certified Financial Planner, Chartered Financial Consultant, Personal Financial Specialist, Chartered Financial Analyst or Chartered Investment Counselor).

The Office of the Attorney General provided helpful information for financial professionals and compliance professionals that summarize what should be done to apply or request an examination waiver.

Lastly, the Rules include a new books and records obligation which require IARs to keep documentation that supports the designation of any client as an “accredited investor” or “qualified client”, as defined under federal law.

If you need any help (i) in determining whether you qualify for an examination waiver, (ii) how to file a Form U4, (iii) whether you must amend your firm’s notice filings, (iv) when you must file your application, or (v) in preparing and submitting your Form U4, do not hesitate reaching out to your regular attorney contact at Stark & Stark.

Photo of Trina Glass Trina Glass

Trina L. Glass is a member of Stark & Stark’s Investment Management & Securities Group. Ms. Glass’ legal practice is devoted to supporting the regulatory and compliance requirements of financial institutions, specializing in securities filings, regulatory analysis, investigations, books and records requirements…

Trina L. Glass is a member of Stark & Stark’s Investment Management & Securities Group. Ms. Glass’ legal practice is devoted to supporting the regulatory and compliance requirements of financial institutions, specializing in securities filings, regulatory analysis, investigations, books and records requirements, regulatory inquiries and exams, risk mitigation, privacy, industry advocacy, advising on written supervisory and compliance policies, and other procedural matters related to broker-dealers, investment advisors, and investment companies.